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Abstract
Business management literature has largely neglected the theme of risk management for SMEs. This workshop sketches the outline of a holistic risk management system for SMEs to overcome the deficits and restrictions that have been detected in the literature. It also offers how such a system could be implemented step by step. All propositions pursue the aim of being practicable for SMEs. The presented holistic risk management framework takes care of the existing business planning and performance measurement instruments of an SME. Special emphasis will be given to business planning for a solid base of risk management. The underlying risk management framework is based on a larger empirical study into SMEs.
Keywords:
Business Planning, Holistic Risk Management, Project Risk Management, Risk profile, Small and Medium-sized Enterprises
1. Introduction
In the past Risk management was mainly concerned with managing single risks, for example financial risks. The development of company-wide (holistic) risk management systems was largely neglected. In the current academic literature there are hardly any practical risk management frameworks for small and mediumsized companies (Islam et al., 2008; Arnsfeld et al., 2007; Berry et al., 2007; Alquier and Tignol, 2006; Leopoulos et al., 2006).
According to the new Basel II equity regulations the lending bank has to evaluate the risk management system of an SME. The sophistication of the implemented risk management system will have a direct influence on the lending conditions. As a result of the recent financial crisis, banks are reluctant to give loans to SMEs. They are demanding more information and transparency on management accounting and risk management systems in SMEs (Merna and Al-Thani, 2008; Basel Committee on Banking Supervision, 2005).
The aim of this workshop is to give practitioners guidelines on how they can implement a sound risk management system in managing their operational and strategic risks. The suggested risk management approach does away with highly statistical methods. The presented holistic risk management framework takes care of the existing business planning and performance measurement instruments of an SME. Special emphasis will be given to business planning for a solid base of risk management. The underlying risk management framework is based on a larger empirical study into SMEs (Henschel, 2008).
This paper describes the main components needed to set up...